Reservation technology becomes a centerpiece for online travel companiesPriceline's acquisition of OpenTable is seemingly wise, as it gives the company an entrance into a reservation space that its customers should find useful. The research firm Piper Jaffray thinks the acquisition could eventually lead to event booking, ride sharing, attractions, and other categories in the booking arena.

Historically, Priceline has been successful with its acquisitions, and at first glance, this one seems no different. OpenTable is expected to grow revenue 19% and 16% over the next two years, respectively, and has an operating margin of 23.5%.

While investors might think that Priceline is ahead of the curve with its OpenTable acquisition, and that its peers will now follow suit, TripAdvisor actually beat Priceline to the punch. Earlier this year, TripAdvisor acquired the European restaurant reservation service La Fourchette for $140 million, giving it access to 24,000 restaurant partners in Europe.

Up until now, OpenTable has created more than 85% of its revenue from North America with its 24,000 restaurant partners. It will be interesting to see how Priceline utilizes the technology in emerging markets, where its platforms are particularly successful.

OpenTable creates revenue from both software installations and reservations themselves. Its 7,700 installed restaurant bases in emerging markets are considered to be a growth opportunity, although OpenTable noticeably lags TripAdvisor's LaFourchette in Europe. Therefore we can conclude that TripAdvisor actually has an advantage in Europe over Priceline, but that Priceline is hoping OpenTable can help it remain the global leader in online travel.

How will Expedia respond?With TripAdvisor and Priceline's acquisitions, both now have an edge over Expedia with a service that it lacks. In a very competitive online travel industry, this could become a nightmare for Expedia if it fails to answer, as Priceline will undoubtedly advertise very well that customers can make reservations from its site.

This fact consequently brings Yelp into the discussion, a company that recently acquired SeatMe, a restaurant and nightlife venue-reservation platform. Unlike OpenTable's fee structure, Yelp has already said that SeatMe services will be free to any business that claims their Yelp page, and with the company having reviews on more than just restaurants, Yelp might already have a service to book a wide array of events.

Will Expedia acquire Yelp, which is currently valued at $5.3 billion? The answer to this question might be yes, and the reason is that it then gives Expedia the competitive edge of not only reservations but reviews for its customers -- and the possibility of reservations outside of restaurants.

Albeit, a Yelp acquisition would be tricky, as Expedia's market capitalization is less than two times as great. Also, there is the question of valuation. Yelp trades at 18 times sales and lacks profits, with an operating margin of negative 3.3%. However, the one thing Yelp does have is growth, with revenue expected to rise 57% and 43% over the next two years, respectively.

As for the financials, Expedia has $2.1 billion of cash and cash equivalents, and debt of only $1.25 billion. Theoretically, Expedia could raise another $5 billion-$7 billion in debt to match its total assets or use stock to fund such a deal.

Foolish thoughtsSure, buying Yelp would be a big risk for Expedia, but doing nothing could be even worse if customers like the idea of reserving restaurants or events in visited cities. Priceline and TripAdvisor have already struck, but in this rare occasion, Expedia might have been left with the best option to purchase.

Don't be surprised to see Expedia make a run at Yelp. If not, expect another company to show interest while Expedia struggles to find an answer to Priceline and TripAdvisor's new edge.

Leaked: Apple's next smart device (warning, it may shock you)Apple recently recruited a secret-development "dream team" to guarantee its newest smart device was kept hidden from the public for as long as possible. But the secret is out, and some early viewers are claiming its everyday impact could trump the iPod, iPhone, and the iPad. In fact, ABI Research predicts 485 million of this type of device will be sold per year. But one small company makes Apple's gadget possible. And its stock price has nearly unlimited room to run for early-in-the-know investors. To be one of them, and see Apple's newest smart gizmo, just click here!

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment icon found on every comment.

Deciding YELP had too many complaints to invest is not a valid reason not to invest. This is typical for Yelp's business...it does not limit them from growing at 60% rate over the next few years and the market cap doubling in the mean time. Everyone is just starting to use yelp as a "go to" for recommendations and soon reservations of all types. They are just scratching the surface and will be a great company to own.